In 1994, Jeff Bezos left a stable, well-paying job in a hedge fund company to start selling books over the internet. Having learned degrees in electrical engineering and computer science, he had been working on building network and web-based tools for other companies.
The rapid growth of Internet use and a new U.S. Supreme Court ruling# that exempted mail order companies from collecting sales taxes in states where they lacked a physical presence tipped the scale in his decision.
It's easy to look back now and say it was a good decision all these years, and success, later. Everything is obvious once we know the answer. Bezos already had a good job and career, this is what he got to lose if things didn't work out. But he was thinking more long term when he chose to give it a try.
To decide, he used the very same construct that makes things obvious to us in retrospect. He used what he called a Regret Minimization Framework. When the 80-year-old Bezos look back, how many regrets would he have? This thought experiment helped him see the value of minimizing regrets.
Over a lifetime, regrets that accumulate take away precious mental energy from us. The effect of unmet potential is also cumulative, the more we yield to should vs. must in small decisions, the more we bob in the ebb and flow of the decisions of others — much better to play the “what if game” for ourselves.
“What have we got to lose?” is the first question that comes to mind when we're thinking about making a change. It's a good question. But it's not complete, it doesn't tell us the whole story. For that, we want to ask a better question — “What have we got to lose if we don't do this?”
We find out later, sometimes way later. When things are going well for us we're comfortable, we take for granted they'll continue to go well indefinitely. It's human nature to want to have little discomfort — we want to minimize the uncertainty that comes with decisions outside best practices and what has worked before.
How small things get us
“Smarter aims are not enough, we also want to make smarter moves — and vice versa.” ~ Valeria Maltoni (tweet this)
But what if we're focusing on the wrong things and we miss the big picture? Bezos looked at two data points to decide to give it a try: 1./ the internet was growing, and 2./ mail order companies not collecting taxes in states where they did not have a physical presence. It wasn't overwhelming evidence, but it was enough to take action.
Amazon wasn't built in one day. The everything store started out with a proof of concept — selling books. One small decision to create an online store where people could search for and find books to buy. For context, Yahoo was founded in January of the same year, six months earlier, and incorporated in March 1995. Google was founded in 1998. It was all pretty new.
What Bezos understood and brought Amazon to online dominance was that it's in the many micro-interactions we have throughout the site that encourage us to spend time and eventually money. The site evolved based on those small decisions. Customer helped build the store based on their actions.
This is how small decisions roll up to big decisions. Patterns. When we pay attention to the small things, finding patterns is easier. It's easy to overlook making small decisions smart due to biases — I know better — and assumptions — it has worked before. Small things get us all at once.
Then we're left with big decisions. For the big decisions we require a lot of data points because we have many moving parts. It's harder to isolate the critical parts when we've not been paying attention to the little things.
When we want to understand later what made a problem escalate, or what created a snowball effect we need to look at different data sets and interactions in different parts of the organizations — a gigantic task across internal divisions, business units, assets and external conversations.
Smarter aims are not enough, we also want to make smarter moves — and vice versa. Amazon offers real business examples of big picture thinking. In his annual letter to shareholders, Jeff Bezos highlights the one thing he's focusing the company on — it's always Day 1:
I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?
Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps.
The sure way to know if we're delivering on that one thing without getting too far down into the weeds is to have obsessive customer focus:
There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.
Because it provides the motivation to look for more opportunities for the business, “customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great.” Hence the ability and permission to play “what if?”
- because speed matters in business, “disagree and commit” is important
- which means we must be good at making course correction
- we see because we're paying attention to the small things (before they get big)
- bosses are not special, this works when everyone is in it together
- which is how we identify true misalignment
When all's quiet on the customer experience front
Customer obsession has been a mantra for Bezos and Amazon for years. It's not a new thing.
Many companies think or say they have an experience strategy, yet the data tells a different story. Forrester research in 2011:
+ 86% of companies say that customer experience is their top priority
+ 76% of companies want to differentiate through experience
+ 76% therefore say they want to improve their online experience
+ 59% want to improve the experience across channels
+ 46% want to add or improve their mobile experience
+ 42% of companies confess that their online/digital strategy is only somewhat reflected with their customer experience
+ very few companies, 64% in fact, have clearly defined customer segments — these companies recognize they need to do some kind of user studies
+ yet only 25% of these companies employees across departments share the same view
+ 62% of the companies say they have a clear and solidly defined brand
+ yet only 35% believe their brand is driving the experience
We can safely assume as customers we continue to be demanding. Five years later, stimulated and engaged by the many brand promises online and offline, we want more, and faster. We also have more choices.
The data has been fairly unambiguous about the level of opportunity. Good customer experience drives revenue, increases orders, creates better margins, improves brand preference and likelihood of referrals. What are some of those figures today? In 2016 according to Forrester:
+ 72% of businesses say improving customer experience is their top priority
+ only 63% of marketers prioritize implementing technology investments that will help them reach this goal
+ 49% of CMOs indicate that tech management is still too slow to meet their needs
According to Zendesk:
+ 87% of customers think brands need to put more effort into providing a seamless experience
According to The Economist Business Intelligence Unit:
+ 79% of senior executives say that improving customer experience a strategic priority
+ but 45% of consumers say a lack of interest in customer satisfaction is the biggest obstacle preventing companies from providing the ideal customer experience
+ only 14% of consumers believe it’s inadequate technology, which goes counter the technology implementations marketers are focusing on
+ the biggest obstacles to better customer service are organizational, rather than technical — less than 33% track customer behavior across channels, 36% (a third of respondents) see silos within their organization as the biggest issue, 24% cite lack of senior management vision
American Express says 74% of people have spent more due to good customer service, and according to Walker, 86% of business to business buyers would pay more for a better customer experience. Analysts and research companies have been tracking these trends for years.
A mere 2% increase in customer retention has the same effect as decreasing costs by 10% say authors Emmet Murphy and Mark Murphy in Leading on the Edge of Chaos.
In the absence of evidence of discontent, the organizational and technical challenges are enough to help justify not doing anything, or not doing as much. But as Bezos says, people are always in for a better experience.
The absence of one may mean a quiet walking away of customers to competitors or other brands that do the job better, or just differently.
Everything is obvious in retrospect
Today companies have a harder time differentiating based on features — the meaningful differentiation is about experience. Many products are fairly straight forward, it is the experience around the product that is hard to replicate.
Meaningfully different service takes some thinking behind it. As Pernille Lopez said at the time she was President of IKEA North America, “you can copy what you see (or think you see), but if you don't know what's under the hood, or behind it, it just won't be the same” experience.
A bad experience will keep people away from a brand for a long time. For each squeaky review or complaint, many more walk away without saying a word. Research by Accenture says 68% of customers say they’ve switched service providers because of poor customer service and 89% of customers get frustrated because they need to repeat their issues to multiple representatives.
Even when they stay due to lack of alternative options, they stay reluctantly buying the minimum possible product, ready to jump at the first opportunity to find an alternative. According to Zendesk 95% of dissatisfied customers tell others about their bad experience.
“Customer experience is the new marketing,” says Steve Cannon, Mercedes Benz USA President and CEO in Loyalty360. It makes it the more shocking that so many organizations hardly ever speak to customers and when they do don't listen while due to outsourcing and costs likely have no idea of what goes out in their communications to them.
When a crisis happens, all that discontent, all the unresolved issues, the small disconnects in experience come out seemingly at once. Yet they were there all along, we just failed to address them. Everything does become obvious in retrospect, even how many crises work as catalyst for deeper problems that went unaddressed.